Panmure hikes Capita target but stock still a 'hold'

12th May 2014 10:02

Panmure Gordon has hiked its target price for Capita after a 'solid' first quarter from the business process outsourcing firm, but has kept its 'hold' recommendation on the stock.The broker has raised its target for the shares from 950p to 1,200p, saying there is good potential for earnings upgrades later on in the year.The new target equates to a price-to-earnings valuation of 17 on 2015 estimates which Panmure believes is "appropriate given the growth potential and quality of earnings coming through". "However, with limited upside potential we maintain a neutral stance for now."Capita said it had secured £1.1bn of contracts in the year so far, up from £660m at the same point in 2013, after being awarded work with Transport for London, Scottish Wide Area Network, John Lewis and the Ministry of Defence.The firm said that its bid pipeline, which stood at £5.5bn as of the end of February, still "remains strong with a good level of replenishment following recent contract wins". The current major bid win rate remains at its highest level, it said.The stock was up just 0.1% at 1,103p by 10:20.BC